Zimmer Biomet Announces First Quarter 2018 Financial Results

Zimmer Biomet Announces First Quarter 2018 Financial Results

- Net sales of $2.018 billion for the first quarter represent an increase of 2.3% over the prior year period, and a decrease of 1.5% on a constant currency basis

- Diluted EPS for the first quarter were $0.85 reported, a decrease of 42.2% from the prior year period

- Adjusted diluted EPS for the first quarter were $1.91, a decrease of 10.3% from the prior year period

- The Company provides full-year 2018 financial guidance

PR Newswire

WARSAW, Ind., April 26, 2018 /PRNewswire/ -- Zimmer Biomet Holdings, Inc. (NYSE and SIX: ZBH) today reported financial results for the quarter ended March 31, 2018.  The Company reported first quarter net sales of $2.018 billion, an increase of 2.3% over the prior year period, and a decrease of 1.5% on a constant currency basis.  Diluted earnings per share for the first quarter were $0.85, a decrease of 42.2% from the prior year period.  First quarter adjusted diluted earnings per share were $1.91, a decrease of 10.3% from the prior year period.

ZIMMER BIOMET INC. LOGO (PRNewsFoto/Zimmer Holdings, Inc.)

"As expected, in the first quarter our performance continued to reflect supply headwinds associated with key brands within our Knee, Hip and S.E.T. portfolios, as well as the ongoing quality remediation work at our Warsaw North Campus facility," said Bryan Hanson, President and CEO of Zimmer Biomet.  "As we look out over the course of the next 18 to 24 months, we will stay laser-focused on taking the necessary actions to narrow our gap to market and drive sustained shareholder value.  These actions include successfully driving our ongoing quality remediation program, restoring supply, and scaling up the commercial launch of compelling new technologies, all of which remain on track."

Net earnings for the first quarter were $174.7 million, and $390.9 million on an adjusted basis.  Operating cash flow for the first quarter was $490.5 million.  Free cash flow in the quarter was $403.4 million.

In the quarter, the Company paid $48.6 million in dividends and declared a first quarter dividend of $0.24 per share.

Guidance

The Company provided the following full-year 2018 financial guidance:

Projected Year Ending December 31, 2018

2018 Sales Growth vs Prior Year(1)

1.5% - 3.5%

Adjusted Operating Profit Margin(2)

27.5% - 28.5%

Adjusted Tax Rate(2)

18.5% - 19.5%

Adjusted Diluted EPS(2)

$7.60 - $7.80

Free Cash Flow(3)

$1.1 billion - $1.3 billion

 

(1)

2018 sales growth vs prior year is provided on an as reported basis and includes 200 to 300 basis points of positive foreign exchange impact



(2)

These measures are non-GAAP financial measures for which a reconciliation to the most directly comparable GAAP financial measure is not available without unreasonable efforts.  See "Forward-Looking Non-GAAP Financial Measures."



(3)

Projected Year Ending December 31, 2018



(in millions)

Low

High

Net Cash Provided by Operating Activities

$1,585

$1,755

Additions to Instruments and Other Property, Plant and Equipment

(485)

(455)

Free Cash Flow

$1,100

$1,300

 

Conference Call

The Company will conduct its first quarter 2018 investor conference call today, April 26, 2018, at 8:30 a.m. Eastern Time. The audio webcast can be accessed via Zimmer Biomet's Investor Relations website at http://investor.zimmerbiomet.com.  It will be archived for replay following the conference call. 

Individuals in the U.S. and Canada who wish to dial into the conference call may do so by dialing (888) 312-9837 and entering conference ID 7278985. For a complete listing of international toll-free and local numbers, please visit http://investor.zimmerbiomet.com.  A digital recording will be available 24 hours after the completion of the conference call, from April 27, 2018 to May 26, 2018. To access the recording, U.S. callers should dial (888) 203-1112 and international callers should dial +1 (719) 457-0820 and enter the Access Code ID 7278985.

Sales Table

The following first quarter sales table provides results by geography and product category, as well as the percentage change compared to the prior year quarter on a reported basis and a constant currency basis. 

 

NET SALES - THREE MONTHS ENDED MARCH 31, 2018

(in millions, unaudited)
























Constant




Net








Currency




Sales



% Change




% Change



Geographic Results














Americas

$

1,208




(1.8)


%



(2.0)


%

EMEA


497




9.6





(3.0)



Asia Pacific


313




8.2





2.6



Total

$

2,018




2.3


%



(1.5)


%

Product Categories














Knees














Americas

$

417




(2.5)


%



(2.7)


%

EMEA


189




12.4





(0.1)



Asia Pacific


107




2.3





(3.0)



Total


713




1.8





(2.1)



Hips














Americas


248




1.3





1.0



EMEA


142




4.5





(7.6)



Asia Pacific


102




9.5





3.6



Total


492




3.8





(0.9)



S.E.T *


443




4.4





1.1



Dental


108




(0.2)





(4.8)



Spine & CMF


183




(1.7)





(3.8)



Other


79




(1.1)





(4.0)



Total

$

2,018




2.3


%



(1.5)


%















* Surgical, Sports Medicine, Foot and Ankle, Extremities and Trauma

 

About the Company

Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer Biomet is a global leader in musculoskeletal healthcare. We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; office based technologies; spine, craniomaxillofacial and thoracic products; dental implants; and related surgical products.

We collaborate with healthcare professionals around the globe to advance the pace of innovation. Our products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Together with healthcare professionals, we help millions of people live better lives.

We have operations in more than 25 countries around the world and sell products in more than 100 countries. For more information, visit www.zimmerbiomet.com or follow Zimmer Biomet on Twitter at www.twitter.com/zimmerbiomet

Website Information

We routinely post important information for investors on our website, www.zimmerbiomet.com, in the "Investor Relations" section.  We use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.  Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts.  The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Note on Non-GAAP Financial Measures

This press release includes non-GAAP financial measures that differ from financial measures calculated in accordance with U.S. generally accepted accounting principles ("GAAP").  These non-GAAP financial measures may not be comparable to similar measures reported by other companies and should be considered in addition to, and not as a substitute for, or superior to, other measures prepared in accordance with GAAP.

Sales change information for the three-month period ended March 31, 2018 is presented on a GAAP (reported) basis and on a constant currency basis.  Constant currency percentage changes exclude the effects of foreign currency exchange rates.  They are calculated by translating current and prior-period sales at the same predetermined exchange rate.  The translated results are then used to determine year-over-year percentage increases or decreases. 

Net earnings and diluted earnings per share for the three-month period ended March 31, 2018 are presented on a GAAP (reported) basis and on an adjusted basis.  Adjusted earnings and adjusted diluted earnings per share exclude the effects of inventory step-up; certain inventory and manufacturing-related charges connected to discontinuing certain product lines, quality enhancement and remediation efforts; special items; intangible asset amortization; any related effects on our income tax provision associated with these items; the effect of U.S. tax reform; and other certain tax adjustments.  Special items include expenses resulting directly from our business combinations and/or global restructuring, quality and operational excellence initiatives, including employee termination benefits, certain contract terminations, consulting and professional fees, dedicated project personnel, asset impairment or loss on disposal charges, certain litigation matters, costs of complying with our deferred prosecution agreement and other items.  Other certain tax adjustments include internal restructuring transactions that lowered the tax rate on deferred tax liabilities recorded on intangible assets recognized in acquisition-related accounting.

Free cash flow and projected free cash flow are additional non-GAAP measures that are presented in this press release. Free cash flow is computed by deducting additions to instruments and other property, plant and equipment from net cash provided by operating activities.

Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in this press release. This press release also contains supplemental reconciliations of additional non-GAAP financial measures that the Company presents in other contexts. These additional non-GAAP financial measures are computed from the most directly comparable GAAP financial measure as indicated in the applicable reconciliation.

Management uses non-GAAP financial measures internally to evaluate the performance of the business and believes they are useful measures that provide meaningful supplemental information to investors to consider when evaluating the performance of the Company.  Management believes these measures offer the ability to make period-to-period comparisons that are not impacted by certain items that can cause dramatic changes in reported operating results, to perform trend analysis, to better identify operating trends that may otherwise be masked or distorted by these types of items and to provide additional transparency of certain items.  In addition, certain of these non-GAAP financial measures are used as performance metrics in the Company's incentive compensation programs.

 

Forward-Looking Non-GAAP Financial Measures

This press release also includes certain forward-looking non-GAAP financial measures for the year ending December 31, 2018.  We calculate forward-looking non-GAAP financial measures based on internal forecasts that omit certain amounts that would be included in GAAP financial measures.  For instance, we exclude the impact of certain potential charges or gains connected to quality enhancement and remediation efforts and certain legal and tax matters.  Other than projected free cash flow for the year ending December 31, 2018, for which a reconciliation is provided, we have not provided quantitative reconciliations of these forward-looking non-GAAP financial measures to the most directly comparable forward-looking GAAP financial measures because the excluded items are not available on a prospective basis without unreasonable efforts.  It is probable that these forward-looking non-GAAP financial measures may be materially different from the corresponding GAAP financial measures.

Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, among others, statements regarding sales and earnings guidance and any statements about our expectations, plans, strategies or prospects.   We generally use the words "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "assumes," "guides," "targets," "forecasts," "sees," "seeks," "should," "could," "intends" and similar expressions to identify forward-looking statements.   All statements other than statements of historical or current fact are, or may be deemed to be, forward-looking statements.   Such statements are based upon the current beliefs and expectations of management and are subject to significant risks, uncertainties and changes in circumstances that could cause actual outcomes and results to differ materially.  These risks, uncertainties and changes in circumstances include, but are not limited to:  our chief executive officer transition, including disruptions and uncertainties related thereto, the potential impact on our business and future strategic direction resulting from our transition to a new chief executive officer, and our ability to retain other key members of senior management; the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods; the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies; the effect of the potential disruption of management's attention from ongoing business operations due to integration matters related to mergers and acquisitions; the effect of mergers and acquisitions on our relationships with customers, vendors and lenders and on our operating results and businesses generally; compliance with the Deferred Prosecution Agreement entered into in January 2017; the success of our quality and operational excellence initiatives, including ongoing quality enhancement and remediation efforts at the legacy Biomet Warsaw facility; challenges relating to changes in and compliance with governmental laws and regulations affecting our U.S. and international businesses, including regulations of the U.S. Food and Drug Administration (FDA) and foreign government regulators, such as more stringent requirements for regulatory clearance of products; the ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA, while continuing to satisfy the demand for our products; the outcome of government investigations; competition; pricing pressures; changes in customer demand for our products and services caused by demographic changes or other factors; the impact of healthcare reform measures; reductions in reimbursement levels by third-party payors and cost containment efforts of healthcare purchasing organizations; dependence on new product development, technological advances and innovation; shifts in the product category or regional sales mix of our products and services; supply and prices of raw materials and products; control of costs and expenses; the ability to obtain and maintain adequate intellectual property protection; the ability to form and implement alliances; changes in tax obligations arising from tax reform measures, including European Union rules on state aid, or examinations by tax authorities; product liability and intellectual property litigation losses; the ability to retain the independent agents and distributors who market our products; dependence on a limited number of suppliers for key raw materials and outsourced activities; changes in general industry and market conditions, including domestic and international growth rates; changes in general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations; and the impact of the ongoing financial and political uncertainty on countries in the Euro zone on the ability to collect accounts receivable in affected countries.  For a further list and description of such risks and uncertainties, see our reports filed with the U.S. Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2017.  Copies of these filings, as well as subsequent filings, are available online at www.sec.gov, www.zimmerbiomet.com or on request from us.  Forward-looking statements speak only as of the date they are made, and we disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Readers of this release are cautioned not to rely on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate.  This cautionary statement is applicable to all forward-looking statements contained in this release.

 

ZIMMER BIOMET HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(in millions, except per share amounts, unaudited)


2018



2017


Net Sales

$

2,017.6



$

1,972.4


Cost of products sold, excluding intangible asset amortization


575.8




512.9


Intangible asset amortization


150.8




152.0


Research and development


95.7




91.1


Selling, general and administrative


785.1




758.2


Special items


105.2




110.1


Operating expenses


1,712.6




1,624.3


Operating Profit


305.0




348.1


Other expense, net


(3.6)




(0.5)


Interest income


0.9




0.5


Interest expense


(78.9)




(82.9)


Earnings before income taxes


223.4




265.2


Provision (benefit) for income taxes


47.2




(34.1)


Net Earnings


176.2




299.3


Less: Net Earnings (Loss) attributable to noncontrolling interest


1.5




(0.1)


Net Earnings of Zimmer Biomet Holdings, Inc.

$

174.7



$

299.4


Earnings Per Common Share








Basic

$

0.86



$

1.49


Diluted

$

0.85



$

1.47


Weighted Average Common Shares Outstanding








Basic


203.0




201.1


Diluted


204.6




203.1


Cash Dividends Declared Per Common Share

$

0.24



$

0.24


 

ZIMMER BIOMET HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, unaudited)










March 31,



December 31,




2018



2017


Assets









Cash and cash equivalents


$

1,765.4



$

524.4


Receivables, net



1,418.5




1,544.1


Inventories



2,125.9




2,068.3


Other current assets



465.5




428.0


Total current assets



5,775.3




4,564.8


Property, plant and equipment, net



2,031.3




2,038.6


Goodwill



10,729.1




10,668.4


Intangible assets, net



8,235.7




8,353.4


Other assets



409.8




388.8


Total Assets


$

27,181.2



$

26,014.0


Liabilities and Stockholders' Equity









Current liabilities


$

1,799.5



$

1,844.7


Current portion of long-term debt



1,625.0




1,225.0


Other long-term liabilities



2,270.3




2,291.3


Long-term debt



9,486.9




8,917.5


Stockholders' equity



11,999.5




11,735.5


Total Liabilities and Stockholders' Equity


$

27,181.2



$

26,014.0


 

ZIMMER BIOMET HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(in millions, unaudited)










2018



2017


Cash flows provided by (used in) operating activities









Net earnings


$

176.2



$

299.3


Depreciation and amortization



263.5




267.6


Share-based compensation



13.9




14.0


Inventory step-up



0.1




14.6


Changes in operating assets and liabilities, net of acquired assets and liabilities









Income taxes



8.6




(86.9)


Receivables



146.2




27.0


Inventories



(39.7)




(13.3)


Accounts payable and accrued expenses



(27.7)




(137.2)


Other assets and liabilities



(50.6)




(109.7)


Net cash provided by operating activities



490.5




275.4


Cash flows used in investing activities









Additions to instruments



(60.4)




(86.4)


Additions to other property, plant and equipment



(26.7)




(43.1)


Other investing activities



(14.6)




(3.6)


Net cash used in investing activities



(101.7)




(133.1)


Cash flows provided by (used in) financing activities









Proceeds from senior notes



749.5




-


Proceeds from multicurrency revolving facility



400.0




400.0


Payments on term loan



(225.0)




(150.0)


Net payments on other debt



(0.2)




(0.7)


Dividends paid to stockholders



(48.6)




(48.1)


Proceeds from employee stock compensation plans



47.9




66.1


Net cash flows from unremitted collections from factoring programs



(60.8)




-


Business combination contingent consideration payments



(13.6)




(6.0)


Restricted stock withholdings



(2.5)




(5.2)


Debt issuance costs



(4.9)




-


Net cash provided by financing activities



841.8




256.1


Effect of exchange rates on cash and cash equivalents



10.4




7.0


Increase in cash and cash equivalents



1,241.0




405.4


Cash and cash equivalents, beginning of period



524.4




634.1


Cash and cash equivalents, end of period


$

1,765.4



$

1,039.5


 

ZIMMER BIOMET HOLDINGS, INC.

NET SALES BY GEOGRAPHY

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017


(in millions, unaudited)
























Three Months Ended March 31,





















2018



2017



% Inc / (Dec)



Volume / Mix



Price



Foreign Exchange



Americas


$

1,208.1



$

1,229.9




(1.8)


%


0.4


%


(2.4)


%


0.2


%

EMEA



496.5




453.2




9.6




(0.6)




(2.4)




12.6



Asia Pacific



313.0




289.3




8.2




6.5




(3.9)




5.6



Total


$

2,017.6



$

1,972.4




2.3


%


1.1


%


(2.6)


%


3.8


%

 

ZIMMER BIOMET HOLDINGS, INC.

NET SALES BY PRODUCT CATEGORY

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(in millions, unaudited)
























Three Months Ended March 31,





















2018



2017



% Inc / (Dec)



Volume / Mix



Price



Foreign Exchange



Knees


$

713.3



$

700.8




1.8


%


1.1


%


(3.2)


%


3.9


%

Hips



492.0




473.8




3.8




1.9




(2.8)




4.7



S.E.T



442.3




423.5




4.4




3.6




(2.5)




3.3



Dental



107.6




107.8




(0.2)




(2.7)




(2.1)




4.6



Spine & CMF



183.1




186.3




(1.7)




(2.2)




(1.6)




2.1



Other



79.3




80.2




(1.1)




(3.1)




(0.9)




2.9



Total


$

2,017.6



$

1,972.4




2.3


%


1.1


%


(2.6)


%


3.8


%

 

ZIMMER BIOMET HOLDINGS, INC.

RECONCILIATION OF REPORTED NET SALES % CHANGE TO

CONSTANT CURRENCY % CHANGE

(unaudited)






For the Three Months Ended




March 31, 2018









Foreign




Constant









Exchange




Currency




% Change




Impact




% Change



Geographic Results















Americas


(1.8)


%



0.2


%



(2.0)


%

EMEA


9.6





12.6





(3.0)



Asia Pacific


8.2





5.6





2.6



Total


2.3


%



3.8


%



(1.5)


%

Product Categories















Knees















Americas


(2.5)


%



0.2


%



(2.7)


%

EMEA


12.4





12.5





(0.1)



Asia Pacific


2.3





5.3





(3.0)



Total


1.8





3.9





(2.1)



Hips















Americas


1.3





0.3





1.0



EMEA


4.5





12.1





(7.6)



Asia Pacific


9.5





5.9





3.6



Total


3.8





4.7





(0.9)



S.E.T


4.4





3.3





1.1



Dental


(0.2)





4.6





(4.8)



Spine & CMF


(1.7)





2.1





(3.8)



Other


(1.1)





2.9





(4.0)



Total


2.3


%



3.8


%



(1.5)


%

 

ZIMMER BIOMET HOLDINGS, INC.

RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(in millions, unaudited)







Three Months




Ended March 31,




2018



2017


Net Earnings of Zimmer Biomet Holdings, Inc.


$

174.7



$

299.4


Inventory step-up and other inventory and manufacturing-related charges



10.8




23.2


Intangible asset amortization



150.8




152.0


Special items









Biomet merger-related



16.6




37.0


Other special items



88.6




73.1


Merger-related and other expense in other expense, net



-




1.5


Taxes on above items (1)



(50.6)




(83.1)


Other certain tax adjustment (2)



-




(69.7)


Adjusted Net Earnings


$

390.9



$

433.4


 

(1)      The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes, as well as permanent items.  For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory rates where the items were incurred.


(2)      The adjustment relates to an internal tax restructuring that lowered the tax rate on certain deferred tax liabilities recorded on intangible assets recognized in the Biomet merger acquisition-related accounting.

 

ZIMMER BIOMET HOLDINGS, INC.

RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(unaudited)





Three Months



Ended March 31,



2018



2017


Diluted EPS

$

0.85



$

1.47


Inventory step-up and other inventory and manufacturing-related charges


0.05




0.11


Intangible asset amortization


0.74




0.75


Special items








Biomet merger-related


0.08




0.18


Other special items


0.43




0.36


Merger-related and other expense in other expense, net


-




0.01


Taxes on above items (1)


(0.24)




(0.41)


Other certain tax adjustment (2)


-




(0.34)


Adjusted Diluted EPS

$

1.91



$

2.13


 

(1)      The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes, as well as permanent items.  For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory rates where the items were incurred.


(2)      The adjustment relates to an internal tax restructuring that lowered the tax rate on certain deferred tax liabilities recorded on intangible assets recognized in the Biomet merger acquisition-related accounting.

 

ZIMMER BIOMET HOLDINGS, INC.

SUMMARY OF EXPENSES INCLUDED IN SPECIAL ITEMS

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(in millions, unaudited)



Three Months




Ended
March 31,




2018



2017


Biomet merger-related









Consulting and professional fees


$

10.0



$

18.7


Employee termination benefits



1.8




(3.0)


Dedicated project personnel



2.2




8.7


Relocated facilities



0.7




2.8


Information technology integration



0.1




2.3


Other



1.8




7.5


Total Biomet merger-related



16.6




37.0


Other









Consulting and professional fees



63.8




50.4


Employee termination benefits



1.6




1.2


Dedicated project personnel



9.3




12.8


Relocated facilities



0.7




2.4


Certain litigation matters



5.7




7.0


Contract terminations



2.6




-


Information technology integration



1.2




0.5


Contingent consideration adjustments



0.5




(3.6)


Other



3.2




2.4


Total Other



88.6




73.1


Special items


$

105.2



$

110.1


 

ZIMMER BIOMET HOLDINGS, INC.


RECONCILIATION OF NET CASH PROVIDED BY OPERATING


ACTIVITIES TO FREE CASH FLOW


FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017


(in millions, unaudited)



















Three Months Ended March 31,



2018



2017


Net cash provided by operating activities

$

490.5



$

275.4


Additions to instruments


(60.4)




(86.4)


Additions to other property, plant and equipment


(26.7)




(43.1)


Free cash flow

$

403.4



$

145.9



 

ZIMMER BIOMET HOLDINGS, INC.

RECONCILIATION OF GROSS PROFIT & MARGIN TO ADJUSTED GROSS

PROFIT & MARGIN

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(in millions, unaudited)




















Three Months Ended March 31,




2018



2017



Net Sales

$

2,017.6



$

1,972.4



Cost of products sold, excluding intangible asset amortization


575.8




512.9



Intangible asset amortization


150.8




152.0



Gross Profit

$

1,291.0



$

1,307.5












Inventory step-up and other inventory and manufacturing related charges


10.8




23.2



Intangible asset amortization


150.8




152.0



Adjusted gross profit

$

1,452.6



$

1,482.7





















Gross margin


64.0


%


66.3


%

Inventory step-up and other inventory and manufacturing related charges


0.5




1.2



Intangible asset amortization


7.5




7.7



Adjusted operating profit margin


72.0


%


75.2


%


 

ZIMMER BIOMET HOLDINGS, INC.

RECONCILIATION OF OPERATING PROFIT & MARGIN TO ADJUSTED OPERATING PROFIT & MARGIN

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(in millions, unaudited)




















Three Months Ended March 31,




2018



2017



Operating profit

$

305.0



$

348.1



Inventory step-up and other inventory and manufacturing related charges


10.8




23.2



Intangible asset amortization


150.8




152.0



Special items


105.2




110.1



Adjusted operating profit

$

571.8



$

633.4





















Operating profit margin


15.1


%


17.7


%

Inventory step-up and other inventory and manufacturing related charges


0.5




1.2



Intangible asset amortization


7.5




7.7



Special items


5.2




5.5



Adjusted operating profit margin


28.3


%


32.1


%


 

ZIMMER BIOMET HOLDINGS, INC.

RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED EFFECTIVE TAX RATE

FOR THE THREE MONTHS ENDED MARCH 31, 2018 and 2017

(in millions, unaudited)




















Three Months Ended March 31,




2018



2017



Effective tax rate


21.1


%


(12.9)


%

Inventory step-up and other inventory and manufacturing related charges, intangible asset amortization, special items and other expense


(1.1)




8.1



Other certain tax adjustment


-




26.3



Adjusted effective tax rate


20.0


%


21.5


%

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/zimmer-biomet-announces-first-quarter-2018-financial-results-300636887.html

SOURCE Zimmer Biomet Holdings, Inc.

Copyright CNW Group 2018